When Fed Chair Janet Yellen speaks Wall Street shutters

You’ve got to wonder who is really in charge when prices on Wall Street hit the skids during and after Fed Chairwoman Janet Yellen’s Wednesday afternoon remarks. It sure can’t be common sense investors.

For openers, Yellen said pretty much what money financiers had expected: Cutting another $10 billion in bond buying next month was considered likely to happen, unemployment hasn’t hit the target rate of 6.5 percent that the Fed is aiming for before making any hike in interest rate changes, and, inflation continues to remain below their 2 percent target.

But what spooked Wall Street was the Fed Chairwoman’s comment about a possible rate hike in six months. One talking head I listened to said that it was the mere utterance of a” six month” time frame that set pre-set computer trading programs into motion. And we all know when computers go wild, all hell can break loose as it did in this case, modestly: The DJIA closed down over 114 points, NASDAQ off almost 26 points and the S&P 500 down 11.5.

From where I sit, Federal Reserve Chairwoman Yellen’s first go it went pretty smoothly. She gave her spiel, answered reporters’ questions directly and even smiled every now and again. And of all the things she said, that reference to a possible rate hike in the not-so-very-distance future ought to have triggered a more positive response particularly from those in the housing industry.

While prices on homes have continued to climb, the number of those able to purchase homes has fallen since the Great Depression began. Why? Basically because banks and corporations have been hoarding cash instead of putting it to good let’s-grow-the-economy use. Meaning, banks have not been lending money—mortgage or otherwise – to anyone who doesn’t have a stellar credit rating. And private industry, i.e., corporations, has laid off people instead of hiring or creating new jobs.

It irks me to hear some people direct all of their angst regarding the Great Depression at the government. It’s not the government that is going to get American’s back working, purchasing new homes and buying more stuff. That’s the job of private industry.

If I were a realtor, I’d be tweeting every one I knew telling them that there’s no better time to purchase a home than now as interest rates aren’t going to stay low forever. Not a new story, but certainly one with more uumph behind it now. If I were in the home building and renovation business I’d be encouraging folks to build or renovate now. If I were selling any kind of home appliance that need financing I’d be doing the same. All for the same reason.

If I were a banker, I’d be inviting new and potential clients in for an open house and telling them about quick financing opportunities. If I were a CEO, I’d let the world know I was hiring—and that working at my company paid well.

If I were a player on Wall Street, I’d take a look at my portfolio to see how it was positioned today and how it might be tweaked for a changing interest rate environment.